By Svea Herbst-Bayliss
NEW YORK, July 17 Manhattan U.S. Attorney Preet
Bharara said investment firms that repeatedly violate the law
should be concerned that they will eventually be held
"People should be afraid that bad actions they have
committed in the past" will catch up with them, Bharara said at
the CNBC Institutional Investor Delivering Alpha Conference.
But Bharara refused to bite when asked several times by the
CNBC host, Jim Cramer, about the insider trading investigation
into hedge fund SAC Capital Advisors and its founder, Steven A.
Cohen. Both have been the subjects for years of federal
investigations of insider trading.
Even as firms in the $2.25 trillion hedge fund industry put
in compliance programs aimed at rooting out malfeasance, Bharara
said some companies' compliance programs clearly just offer lip
service. He said his office is as committed as ever to crack
down on how some hedge funds may use illegally obtained
information to get an edge.
He said that at some point, institutions that have had
multiple violations must be held accountable.
The long-running investigation of insider trading at hedge
funds and specifically at SAC Capital has been one of the high
priorities of Bharara's tenure as U.S. attorney.
Reuters and other news organizations have reported that
prosecutors are considering bringing a racketeering charge
against SAC and Cohen in light of a number of guilty pleas some
former SAC employees have made to using illegally obtained
A spokesman for SAC declined to comment.
Bharara, who joked at last year's conference that he has
enough subpoenas for everyone in the audience, said on Wednesday
that his office is weighing whether to bring actions against
firms for violations that have not been made public.
Bharara also said investors should not feel safe from legal
scrutiny if they use certain kinds of communication. He made his
comment in response to a question from Cramer about whether
prosecutors are monitoring things like Snapchat, a messaging
system in which communications disappear within seconds after
being sent. The messaging system is said to be gaining favor
with some on Wall Street.
Bharara seemed puzzled at first, saying he was not aware of
it but then said no communication system should be presumed to
be safe from potential government monitoring if people are using
it for the wrong purposes.
He said the press can serve an important role, but warned
that "armchair prosecutors," including some in the media, are
As the investigations move ahead, Bharara also said his
office could file charges against a company. Although it would
be a "rare use of power," he acknowledged that this is something
his office could do.
He made it clear that his office was not responsible for
leaks to the media about investigations. If he found one of his
prosecutors disclosing information to journalists, he said that
employee would be punished.